China Steps Up Deals for Australian Mines

China has upped its bets on Australia’s resources, even as low prices of zinc and gold take the gloss off the sector.

Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd. is offering to buy out minority investors of Perilya Ltd. in a deal that values the Australian mining company at 269.3 million Australian dollars (US$243.9 million).

Bloomberg

China’s No. 3 zinc producer already owns 53.4% of Perilya, which operates base- and precious-metal mines in Australia and the Dominican Republic. The company said it wanted to buy the rest of the stock for 35 Australian cents a share.

The offer represents a 59% premium to the stock’s closing price on Aug. 30, when Perilya’s shares entered a trading halt on Australia’s stock exchange. It also represents a 109% premium to the its volume-weighted average price over the past three months, the company said.

“Zhongjin’s proposal is priced at a level that represents an opportunity for Perilya shareholders to realize an attractive premium for their investment in a challenging global economic environment epitomized by weak base and precious metal prices and a high Australian dollar against the U.S. dollar,” Perilya’s Managing Director Paul Arndt said in the statement.

Perilya said its directors would unanimously support the proposal if an independent report found the deal to be in the best interest of minority shareholders, and no other offers emerged. A deal would also need Australian and Chinese regulatory approval.

Zhongjin Lingnan first bought into the Australian firm in early 2009 through a share placement and strategic alliance agreement–which included financial support during the global financial crisis and access to Zhongjin’s market intelligence on China.

Perilya said it expected shareholders to vote on the proposal at a meeting in December.